My car is old enough and with enough miles that it's next owner is likely the local junkyard when I finally kill the engine. KBB lists its value around $750, so not worth a trade-in.

Who uses Kelly Blue Book these days? Edmunds or NADA.

What you do here is haggle the price down first without a trade then added it the end.

I find the best way to negotiate a price is to first get the price for the new car written down, *then* tell them you have a trade in, and then you can negotiate the price on your trade in. This avoids any issues of the dealer jacking up the price of the new car because your trading another car in.

Never get fixated on ONE thing when buying a car - the dealership can almost always find a way to meet that demand.

If you want to get all fixated on getting the most for your trade-in? Fine, they'll give you a great deal on your trade-in. And they'll just bake that right into the selling price or raise the APR and make more "reserve" on your new car.

You're an APR junky? Have to have the best APR on the planet? Not a problem - even if you have lousy credit, the dealership can honestly give you whatever APR you want. Here, they'll either short you on your trade or refuse to negotiate on the selling price of your car.

You did all your research and you know the invoice price of your car and you're not paying a dime over that? Because you're the negotiating master? Not a problem. Here, it's about APR reserve and not giving you anything good on your trade.

Fixated on your monthly payment? Well, they'll get you there - everything else is just moved around at will to get you to that point.

I should mention that "reserve" is an amount that is paid back to the dealership between the bank/financing company on the difference between what the contract is written at and what the actual bottom-line rate would be. So if the bank might charge 7.5%, the dealership can charge you 8.5% and get paid a portion of what the finance charge would be on that 1% difference.

Oh - and your trade? Good luck on ever realizing what it's really worth. Most dealerships and banks really use MMR (Manheim Market Report) values for true worth - it's Manheim's daily auction values. Unlike NADA or Kelly which are updated monthly, these are real-time values and have far more accurate regional values (yeah, KBB and NADA ask for zip code on the site, but that's data-gathering for them and the actual regions are huge).

Negotiating for a car is complicated. It's important to be informed and TO READ YOUR CONTRACT before you go.

Now, to be happy, ask yourself the following:

- Can I afford my monthly payment and the additional obligations that will come with it? (Meaning did you research your new insurance costs, upkeep and things like monthly gasoline beforehand.)
- Do I understand all of the terms in my contract?
- Did I read and understand everything before I signed it?
- Did I leave with the contract I wanted? (Don't lease to get to a payment when you really wanted to buy, don't buy when you only wanted to pay for depreciation and to stay within a car's paid service period.)
- Is this the car that I researched and wanted when I walked in the door?

If this is all true, you did a good job. It's not as combative as it sounds. You actually do have to buy something, pay an APR and you're at a place of business that intends to make a profit. If you're educated and you know what you want, you'll do well. If you just go in fixated on one thing and you've done no research outside of "I really want the yellow one!" you're going to be unhappy no matter what.

The two sites that I found most helpful in avoiding the dealer tricks are truecar.com and edmunds.com Both sites have accurate information on the minimum price/greatest deal people receive, including current information on promotions from the car makers that the dealer gets. I also find the the trick to negotiations is to be very polite and concede a little. If it is apparent that the dealer is not close, thanking them and preparing to leave will do wonders in encouraging progress.

When I do get back to America I might end up trying to get by on public transport or with a used car. I like the Buick China method better where there's a fixed price tag on the website that the dealer also abides by. No pressure (well, you do try to get as many free or discounted extras piled on as you can rather than try to hack away at the sticker price). Also nice that they act as a middleman between you and the insurance company. Certainly beats going into any GM dealer in America. And that's why people love Buick here. It's the only place I'd even think of getting a GM car (the Buick Excelle, in particular, really should be sold in America; it's one of the best under-US$20k cars I've been in).

Figure out what you want out of a car, what options you want, what your goal is with a car and then apply the criteria to different cars. Don't think of it like "I want a Ford with a sport rack" - think of it as "I want sport rack - which cars offer this?" It's fine if you really only want to buy Ford or Honda or whatever, but if you don't have a manufacturer preferance, getting fixated on the brand of the car may blind you to better deals with other companies.

@kewl132: You can't do that typically. Those deals are only if you pay full price. It's in the fine print. That's the only way they can afford to pay you "$4000" for your trade.

I hear often "All Credit Apps Accepted" - No shit they'll accept your ap. They might not APPROVE it though...

Just focus on the difference between the total amount of the new car and total amount of the trade-in. No need to juggle multiple numbers here. That's all you should be haggling over. Everything else is a distraction.

@theblackdog_LovesCarRepairBills: You could donate it to the Volunteers of America and get to write it off on your taxes.

Whenever you buy a car the thing you should look for is. The difference. That is how you compare.

Car you want minus car your trading in.
Then go to the dealership down the block and ask them the same.

That is the only thing you should haggle because us good consumerists get our financing beforehand.

@ssaoi:

Umm... the loan is where dealers make most of their money.

I've had friends negotiate the firm price of the car before they announce that they have a trade-in. They got the full trade in value, but without any add-ons by the dealer.

Why is it with the huge upheaval in the auto industry that new car dealerships are still the same evil places they were before? Besides a home, that is paid for over 30 years, and you hire a pro to help you negotiate, what other product do you purchase without knowing the price ahead of time?

I wonder when the big 3 will realize that auto sales suck, because people don't like dealing with the dealerships.. (BTW, my roomate was a Finance Manager at a toyota/dodge dealership.. He would scare me with the crap that they trained these people with..)

@Stephmo: I like a lot of your points, especially the end questions. I did want to note, though, that you don't have to pay an APR, and you certainly don't have to pay it to the place that sells the the car.

@squinko: NPR stations will also take junkers. Not sure if it's every station, but they always advertise that donation option on Car Talk.

@Hoss: I swear by www.carbuyingtips.com. I spent about a month on this site before I bought my last car. Tons and tons of great information although some of it is a tad dated.

@QuantumRiff:

Perhaps it's just the way it works with big purchases. The same applies to getting large-scale renovations done on your house.

Any advice for a cash buyer with no trade-in? I would like to buy new as I can write off the sales tax and license fees.

@treimel: No -- SERVICE is where the dealers make most of their money. The entire sales function is often just a loss leader for the dealership.

@QuantumRiff:
Please share some of the training! I'm sure that some choice tidbits would make for interesting reading!

@QuantumRiff:

Well, for some odd reason, car companies are not allowed to sell their own wares. They have to have the dealerships do it for them. And yes, it is REALLY stupid, since the dealership experience can sour one to a manufacturer.

Any advice for a cash buyer of a new car? No trade-in. I want to buy new because I can write off the taxes and fees.

There used to be a Mazda dealership in Orlando that advertised good money on any trade for any car "on the showroom floor." That would have been great had there not been only one car on the showroom floor. Of course, it was the most expensive model with every available option from the factory and quite a few more added by the dealer the dealer that brought the price to about $40,000.

Actually, Stephmo above covered many of them, like My roomate could add up to 3% to the car loan APR.. So if they computer says they qualify for 5% loan, they would offer 8% first, then if the person is really upset, walk it down..

Or their training on Psychology, and to know when a customer is getting frustrated, and "flip" them to a "manger" to close the sale (which is really just another salesmen) because the customer feels like the person they didn't like is going to get in trouble, and the salesmen would rather split a commission than not get one...

his little speech he gave on extended warranties when he became finance manager sounded really good.. really, really good.. and he was making over $100,000/year selling extended warranties on Toyota's, right after the actual salesperson would tell them it was the most dependable car on the market... (as in 99.99 reliable means your car isn't going to work for 1 day a year, and at the shop rate of $100/hr, and average cost of parts per vist at $x.. this sure is cheaper, while still being 99.99 reliable...)

Also, too many customers and other dealers made a big deal about "amount over actual invoice".. so, the Manufacturer, like Dodge, sells the cars a bit higher to the dealership.. Then, if they sell X cars a month, the dealer and the salespersons get checks, directly from the manufacturer. So they could technically only make a $50 commission off your sale, But, get a bonus for jacking up your interest rate, and get a very large check from dodge for selling 4 cars that month... They just move the profit part out of what you can control, to limit your bargaining power..

@ssaoi: I'll agree on that. My negotiating point on my last car purchase was: "After factoring in my trade, I want to pay $24k for this car."

That was a bit lower than where I expected to be. Final total ended up being about $500 over my request. After a few "speaking to the manager" deals, that's where we got to, and that was fine with me.

@treimel: Exactly. Car dealers love buyers like ssaoi (to be fair, they love anyone that forgets any of the three legs of their profit-extracting model, and/or forget the manufacturer rebates).

...the staggering thing is that people still fall for these moronic maneuvers. Hence, we still have Bose, Monster Cable, and Apple around too...

@QuantumRiff: Flexible pricing happens on everything. But in the case of cars the money at stake is significant enough for 1-on-1 salesmanship. Professional car-buyers are a good idea though...but I guess they'd rather go into real estate and make $10k/h.

@A Pimp Named DaveR:
I'm talaking about the purchase of cars, as is the article, and this commenter.

@YouDidWhatNow?:
You lost my at Apple--15 years of Pc, and I will never, ever go back...

@treimel:
"me," not "my."

@jamesdenver: In my area, it's "You CAN be approved, guaranteed!" Of course they CAN approve you. It doesn't say they WILL approve you.

@QuantumRiff: Who is "the big 3?"

The other thing about zero-percent financing is that it's often not as good of a deal as a straightforward cash rebate.

There's often a good possibility that you're better off taking, for example, $2500 off initially at a reasonably low interest rate, which translates to lower payments and a lower total cost of the loan as opposed to $0 rebate and 0-percent interest.

So even if you qualify, it's best to do the math beforehand.

@jamar0303: That's basically the same car as the departed Suzuki Forenza and Reno, only with more luxo bits like premium sound, auto climate control, etc. The Forenza did initially come with some luxury features as options like leather, but those are pretty rare.

Sorry, bit of a car nerd. :p

There is a place in CT with locations in Milford and Naugutuck that regulary advertises that they can get anyone finance and drive away for only $99 a month on any car. They always show exaples. My favorite was a Dodge Ram (when they still had a Dodge franchise) and the fine print at on the screen said "requires sale price of $58,0000 with $50,000 down and 60 months financing on approved credit.

He always made me laugh at his adds. Now that they only sell used cars he is doing it with used cars. The ne wone is a Cobalt LT with a sale price of $23,000 (wwwwwaaaaaayyyy above Blue Book) and $18,500 down.

@temporaryerror:

Check out edmunds.com: search specifically for information on the four-square ripoff and confessions of a Car Salesman. Here's one article and one from Consumerist that links back; there are more.

[www.edmunds.com]

[consumerist.com]

@squinko: @NatalieErin: Both of those are excellent suggestions, I'll keep them in mind in the future.

The best way to avoid this scame is not to "become aware of the value of your car through such Web sites as Kelley Blue Book and Edmunds."

The best way is to use those sites to find the best price on the new car, lie to the SOB, telling him you have no trade-in and negotiate that price. Get it in writing, signed by the sales manager or the general manager, not the salesman, or they'll give you the old song and dance about how the salesman wasn't authorized to make the deal. Then come back the next day and tell the you've changed your mind and you'll let them have your $15000 car for the $4000 they're offering.

The

@jamar0303: The Carmax used car chain operates like that. Everything is fixed-priced, and their entire inventory is viewable through their website. We've bought two cars from Carmax, and the process is pretty hassle-free.

@Hooray4Zoidberg: I've been using that site for more than a decade, and I recommended it to everyone. The information there is top notch. (I joke that it hasn't been redesigned in more than a decade, but it's still awesome.)

I remember 2 things about buying a car in 2000, using advice from that site:

1) I did the back-of-the-napkin calculations on the estimated dealer cost of the car I was interested in. When the salesman made the mistake of saying that he had to make at least $500 on the car, I made him get out a piece of paper and we started laying down costs. When I said that he had to take off 3% for the holdback, he actually gritted his teeth, muttered "holdback" under his breath, and wrote it down. I ended up paying $21700 on a $25900 sticker price.

2) I checked my bank for financing before going to the dealership. My bank at the time would do 7% on a new car, or 6.75% with auto-deduct from a checking account. When I got to the finance manager at the dealership, he tapped away at his keyboard for what seemed like 10 minutes. He finally announced, "How about 7.5%?" with a big grin like he was doing me a favor. I mentioned what I had found out at my bank. He pulled out a couple of "half-point discount coupons" out of his desk and signed them, then said "How about 6.5%?"

Good times.

Don't forget that many auto dealers use the FICO Auto Industry Option to rate your credit, not the standard one you can easily obtain. So if your vehicle-related credit is spotty (or sparse, as mine was), an average 820 FICO becomes low 700s, falling under the typical 740 threshold for the advertised (premium) financing.

(Of course then I got over the new car lust and realized I didn't want to throw away thousands of dollars in depreciation overnight...)

I have always wondered why car dealers run so many TV ads designed for idiots and if they really work. WHO on Earth could believe someone is going to pay them $4,000 for a piece of junk used car and not have a trick to add it to the price somewhere?

The moment a dealer asks "what do you want to pay per month" the hair stands up on the back of my neck.

@jaydez:

Sounds like a dealer who specializes in low-income/low education level consumers with low credit scores. I guess the idea is you can trick them easier once your commercial gets them to come in expecting to really get a car for $99/ month.

@Stephmo: Very good points, and I agre with them all. I tend to do the following:

1) Research the invoice price of the car, know the dealer holdbacks and rebates.

2) Research the trade-in value for your vehicle (KBB, Edmunds, NADA and CarMax are your friends...USE THEM!). If your vehicle is in good condition, consider selling it yourself.

3) Obtain a loan with your bank (or wealthy relative who wants to earn a bit more interest than they can with the money sitting in a 3 year CD), and avoid the dealer financing options all together.

By doing this, you are taking all variables out of the dealers hands, and you can pick and choose the best combination that work for you. Of the last 3 vehicles I purchased new from the dealer, I have done my research on the price, and secured financing through other means, and not traded my old vehicle in to the dealer. It then came down to where I could get the best price. In once case, I sold my old vehicle to a 3rd party, in another case, I sold it to CarMax, and in the third case, I kept the vehicle to drive as my day to day vehicle, to keep miles on the new vehicle down.

@treimel: When I was a young lad and purchased my first new car, I went to the finance office, and they automatically calculated the figures on a 4 year loan. I asked them if they could refigure the numbers based on a .... at which point they cut me off and said 5 years SURE!, I replied "No, on 3 years" The monthly payment between a 3 year loan and a 4 year loan was $35. I took the 3 year loan and paid the car off 6 months early.

Most Consumerist readers already know this, but don't become fixated on the monthly payment, because a dealer is more than happy to lock you into a 5, 6 or 7 year loan to "Get you into a car for $400/month" (and after you pay $60,000 for a $22,000 car it is time to buy a new car and start the process again). If you can't afford the monthly payments, perhaps you should be looking at a less espensive car rather than extending the period of your loan.